src.icon += rgb(0,128,60)
src.icon -= rgb(0,128,60)

Problem description:

It makes the icon colour a funny red. I wanted it to flash then return back to normal.

Is this what its supposed to do? Am I using RGB wrong the reference didnt seem to indicate how to revert it back. I just assumed -= was it since you used += to do the change.
Try using overlays instead of modifying the icon. Create an image that copies the mob's icon and change it. Add it to their overlays, then just take it off when you don't need it.